Legal Requirements of Selling For Sale By Owner (FSBO) in Arizona
A seller is not required by law to sell a property using a real estate agent. You can sell a property yourself and save the money that you would have paid in commission. There are legal requirements that must be followed when selling property in Arizona.
Written AgreementThe initial legal requirement is that an agreement to sell real estate must meet the Arizona Statute of Frauds, A.R.S. ? 44-101 and be in writing in order to be enforceable. Documenting an agreement to sell real estate provides written evidence of the contract terms and rights and responsibilities of the buyer and seller.
Seller DisclosuresThere are also certain seller disclosures required by Arizona and federal law that must be communicated in a particular manner and at specified times. Sellers are obligated by Arizona common law to disclose all known material facts about a property to the buyer. Arizona law also requires that sellers make additional disclosures to prospective buyers under certain circumstances: Swimming pool; planned community or condominium association; notice regarding soil remediation; affidavit of disclosure; military or public airport; subdivision pubic report & dangerous drug lab disclosure. Said disclosures must be drafted in a particular manner and must be provided at specified times during the sales transaction. Failure to disclose can subject a seller to liability and exposure to monetary damages or voiding of the contract.
Comply With Anti-Discrimination LawAnother legal consideration is complying with anti-discrimination laws. Title VIII of the Civil Rights Act of 1968, known as the Fair Housing Act, prohibits discrimination on the basis of race, color, national origin, religion and gender in most housing transactions. An 1988 amendment to the Fair Housing Act added familial status (presence of children under 18) and disability. The Fair Housing Act is intended to ensure that all persons receive equal housing opportunity. In some circumstances, the Fair Housing Act exempts owner-occupied buildings with no more than four units and single-family housing sold or rented without the use of a broker.
Comply With Foreign Investment in Real Property Tax Act of 1980 (FIRPTA)The Foreign Investment in Real Property Tax Act of 1980 (FIRPTA) authorizes the taxation of foreign persons on dispositions of U.S. real property interests. If you are a U.S. citizen or permanent resident, simply complete an affidavit stating such and provide to the buyer. If you are a foreign seller, not a U.S. citizen or permanent resident, the buyer is responsible for a percentage of the sales price to be withheld for the IRS. The gain on the sale is taxable to the foreign seller, but the buyer is liable if the tax is not paid. There are exceptions to FIRPTA withholding which can be found on the IRS's website.